Snapshot

LeverJ is a decentralized (leveraged) crypto currency exchange which aims to be the solution to the inherent risks that remain with the centralized trading platforms. In the recent past, we have heard of the high profile incidents where centralised exchanges have been hacked with sums to countless millions being stolen; the Mount Gox and Bitfinex hacks in 2014 & 2016.

LeverJ’s highly awaited platform is designed for traders interested in leveraged crypto currency trading. The project will enable users to place and manage positions on digital currencies, as well as futures on major equities indices and single stock futures, all in a decentralized way.

Built on the Ethereum blockchain, the LeverJ platform is powered by sophisticated smart contracts. Blockchain venture studio, ConsenSys serve as technical advisors to the project as it prepares for it’s ICO scheduled for 7th November 2017.

Overview

Centralised Exchanges

Growth in the crypto currency markets has been rapid and fast with more and more new investors eager to take advantage of this new phenomenon of financial/digital currency. The main forms of entering of market is through a trading exchange and nearly all are centralised.

Centralised exchange: ‘A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.’

With the increase in interest in the space by investors and speculators in the space, hackers and criminals have also taken note. We have seen serious incidents with major centralised trading exchanges being hacked with multi millions being stolen. Mount Gox reported $62 million stolen in 2014 subsequently filing for bankruptcy. In 2017, Hong Kong based Bitfinex announced the theft of $72 million. Bitstamp, UK based exchanges, was more recently hacked for $5 million. The inherent risks of a centralised exchanges will remain as long as criminals have the means to hack into them.

Tackling these problems are the sleuth of decentralised exchanges entering the crypto currency space. Some good examples of such exchanges are Variabl, Paradex, Rader Relay, Kyber Network and Cobinhood to name but a few. The most popular decentralized exchange is EtherDelta, with daily trading volume of over $4 million.

LeveraJ Protocol

Entering the space is LeveraJ with their highly anticipated leveraged trading exchange. How LeveraJ differs from other exchanges is that it will allow leveraged trading of crypto assets — thereby unlocking a massive amount of potential, both within the trading community, and for the liquidity of the crypto asset class as a whole.

With the current state of the bitcoin dominated networks, the decentralized model has become prohibitively expensive with many seeking alternative solution. Ethereum transactions have been much faster and more importantly cheaper, making it the natural alternative for use in developing a decentralized trading platforms.

“Enabling exposure to the top cryptocurrencies using only ether as the currency of settlement is an important market need. The ability to get exposure to the top tokens without the need to manage multiple wallets is highly appealing for speculation and hedging. The LeverJ platform eliminates security issues with wallets and nodes of new tokens. Based on our research and customer demand, we have developed a modular, easy-to-use UX with trustworthy, reliable APIs that will make the exchange appeal to all traders. We expect to see ample migration from users of centralized exchanges.”

LeverJ is aiming to create a trade-off between the most attractive and efficient elements of centralized and decentralized solutions. The LeverJ exchange will decentralize safety-critical functions such as custody, while centralizing speed-critical functions such as order matching. With a tight focus on derivatives trading and the supporting ecosystem, LeverJ has taken the approach of defining the product first.

Rao states: “We have built a functioning exchange with a usable UI (user interface), decentralized identity, and provable audit. We plan to decentralize the back-end and add ecosystem features that will enable large players to move into the cryptocurrency world.”

Leveraged Trading Platform

The derivatives market is the largest market in the world, estimated to be worth $1.2 Quadrillion and growing at an estimated 30% per year. The cryptocurrency market is an evolving and rapidly growing trading arena worth over $200 billion. LeverJ will provide instant and easy access to both markets through its platform.

Leverj is created with the professional crypto trader. The exchange will primarily focus on the user experience, quality assurance, and providing advanced trading tools to set itself apart from the competition. Such features include tools and indicators for Technical Analysis, Trade Replays, Copy Trading, and automated routines that are set up by the user.

“Previous efforts to establish markets for leveraged cryptocurrency derivatives have focused on centralized exchanges, which traders must fully trust to custody their funds,” said LeverJ CEO Bharath Rao.

LeverJ will offer “decentralized identity” to avoid identity leaks as well as multi-signature accounts to provide complete user control over account funds. Counterparty and custodial risks associated with current cryptocurrency trading will be significantly mitigated while reducing latency and settlement times.

Tokens Usages

LeverJ will initially be a ERC-20 token exchange, however there are plans to implement other assets as outlined within their roadmap (see diagrams below). These include crypto index funds, cryptocurrency futures (Bitcoin and Ethereum futures), Contracts for Differences (on Commodities, Oil and Gold) and stock futures. The inclusion of these options will be hinged on the capital raised and will ultimate determine how quickly they are made available.

LeverJ tokens enable the ecosystem participants to interact with each other in addition to the exchange. The hope is this will unlock a huge market of services that is not yet developed in the Crypto space.

The ability to get exposure to the top tokens without the need to manage multiple wallets is highly appealing for speculation and hedging,” Rao stated. “The LeverJ platform eliminates security issues with wallets and nodes of new tokens. Based on our research and customer demand, we have developed a modular, easy-to-use UX with trustworthy, reliable APIs that will make the exchange appeal to all traders.”

“In the past, decentralized exchanges have been more concerned with academic discovery and protocol research while generally ignoring the quality of the user’s experience. Leverj stresses the importance of usability.”

The Bitcoin version (known as Coinpit and available since May 2016) of the platform already has the following features in production:

Decentralized Identity: Use a bitcoin address as your identity. You are no longer controlled by your email provider or ID provider. You are resistant to phishing.

Split Multisig with Hardware wallet support: Funds not in trade are parked in a 2-of-2 multisig. Coins cannot move from this account without signature from your private key. Use a hardware wallet for extra security.

Segregated accounts and 100% proof of reserve: All balances for user accounts are on blockchain. Unauthorized moving even a single satoshi would be noticed immediately by the entire world.

Proof of audit: Hash of settlement data embedded in blockchain as OP_RETURN.

The Ethereum version will add non-custodial accounts and the token ecosystem. The company expects to have its decentralized ETH/ERC20 spot-trading platform ready by early 2018, and fully decentralized custody futures trading live by Q2 2018.

LeverJ DApp is designed as a two level token. The primary token LEV is of fixed supply and represents a license to transact on the platform proportional to the percentage ownership of the token supply. The secondary token FEE is the accounting mechanism to ensure the right of FEE can be exercised fully in a decentralized manner. This is a way to distance the appreciation of the utility token (LEV) while being able to maintain a steady price of FEE tokens. LEV can be utilized to stake and receive the FEE created proportional to platform volume.

Roadmap

Team Members & Advisors

The team is made of people with deep experience in finance, technology and economics. The CEO is a 10 year wall street veteran and a professional trader with his own trading blog. The CTO has 10 years experience building high-speed forex trading platform. The Head of Marketing is a 20 year veteran with deep experience in digital marketing. Their economist is a well respected figure in crypto and a trader. The community manager runs her own crypto community in addition to LeverJ.

ConsenSys will serve as a technical advisor to LeverJ and support the project. Employing top experts in smart contracts, token design, and cryptographic security, ConsenSys brings deep experience building software on the Ethereum platform, which was co-founded by the firm’s founder, Joseph Lubin

“As a global leader in blockchain technology, ConsenSys is committed to building software that helps expand the ecosystem around Ethereum, the most advanced blockchain platform powered by the world’s largest developer community. In this spirit we are proud to support LeverJ, which promises to make significant strides toward this goal by improving security and usability in trading,” commented ConsenSys founder Joseph Lubin.

The Token Generation Event

LeverJ is launching a token generation event or ICO to raise capital for the development of its trading platform. LEV will be the main token for value with the FEE token used for utility within its platform. The total supply of LEV is 1 billion tokens.

A private presale was held with an undisclosed level of funding raised. Presale token distribution of tokens was set at 4615 = 1 ETH. LeverJ also ran a whitelist which gave those that registered early access to their main crowd sale on the 4th November 2017. The main sale is scheduled for 7th November 2017

The total hard cap for fund raising is $26 million with 400 million LEV tokens made available for purchase over the duration of the ICO. During the main crowd sale 150 million LEV will be released at a conversion rate of 4615 LEV = 1 ETH (35% bonus inclusive). The remaining 250 million of which all will be for sale at a conversion ratio of 1 ETH to 3,000 LEV. Breakdown of token supply is as follows:

Unsold tokens will be locked for 12 months and be used for future marketing and partnerships.

Assessment

Positives

Leverj is offering a pioneering product that has already drawn a lot of attention. As an investor and former trader, I believe what LeverJ are aiming to do will hugely boost the scope and much needed adoption of crypto trading by major traders outside of the crypto domain. This will boost the capital and liquidity supply into the space. Additionally, if the platform can deliver what it sets out, then traders will certainly flock to utilise the sophisticated features that traders seek, i.e. cross leveraging, increasing/decreasing margin positions as well as automated trades.

With a large part of the Crypto Currency space already Ethereum based, LeverJ should have no issues in garnering mass adoption and volume from traders who have been seeking a more robust and speedier trading ecosystem.

The LeverJ team also have a proof of concept with the existing bitcoin trading platform known as Coinpit. However, the platform hasn’t had much (success) use in volume of trading. Besides this, the platform does serve as a good measure that the team behind LeverJ can deliver a functioning product for traders. The focus for LeverJ will be to deliver on their roadmap an advanced trading platform that better caters for the needs of traders in the crypto space whilst at the same time attracting, through strong marketing, new traders/investors into the crypto currency market.

Another thing that stands out is the team behind the LeverJ project. The CEO has been very prominent is his recent campaigns and this has been successful in building a level of anticipatory hype within the space about the project. This has been well structured and largely due to the marketing campaign which has been product led. Overall, I believe the team is well rounded with the experiences that they have in their respective fields along which bodes well the long-term success of the project.

Also worth mentioning is the 2 level token structure with the LEV tokens being the main value token of the LeverJ project with the FEE token be the platform utility token. This is very much operating the way Ethereum and NEO works with the use of GAS which is used as the fuel for transactions. This separation allows the intrinsic value for the LEV token to blossom over the long term, particularly as LEV holders will be able to stake their tokens to generate FEE tokens.

Rao states (telegram comment) “Our token is the only one we know that has been designed carefully with economic incentives in mind. Any other token you buy, the only thing you can think of is: when can I sell. All such tokens are weak. As most of you will agree, no one buys tokens for “governance” or “prepaid fees”. A token with real utility is like Ethereum. Things can be built on top of it and make it very attractive to acquire.”

Concerns

The token metrics are perhaps not the best structured considering the current climate of ICO’s. Presale investors were able to pick up 4615 LEV per ether (35% bonus) whereas the main sale distribution is a flat 3000 LEV per ether (no bonus). Up until 6th November, 38% of token supply was already taken up (approx. 152 million) of the 400 million available to the public. Meaning that all the bonus tokens were already taken up by presale investors. Consequence of this could mean a large sell off tokens by these presale investors upon token release on exchanges this supressing market price.

In addition, only 40% of the token supply is main available to the public which isn’t the most appealing when it comes to ICO distributions. Founders have retained 20% of supply which is reasonable, however token vesting periods are not very long from release; 10% immediately on release, 30% in 6 months, 30% in 12 months and final 30% in 18 months.

The other concern to highlight is the stiff and fierce competition that is evolving within the decentralised trading space and many exchanges are launching in the coming months and into 2018. Variabl, Kyber Network and Ox (radar relay) to name but a few. Therefore, it is significant for LeverJ to distinguish itself from these competitors to ensure a strong user base is developed. This will be key to the long-term success of the platform and something the team will need to focus a lot of attention on. Their current Coinpit platform has not been a success and something that has been not spoken about during the LeverJ campaign (and rightly so).

ICO Rating

The key aspects of an ICO when considering it as a potential investment rests in key areas known as the Key Value Measures (KVM). These measures have proven to be fundamental factors in analysing the potential success of an ICO both in the short term and long term.

Separate medium post will uploaded to further explain criteria used in more detail.

Key Value Measure (KVM) Grading

Concept Value: (4)

Development Value: (4.3)

Technological Value: (4.8)

Management Value: (4.2)

Marketing Value: (3.7)

ICO Value: (3)

LeverJ’s overall score is 80% and a Tentative Buy.

ICO Return on Investment (ROI)

· Short term ROI: Low

· Long term ROI: High

· Risk Grading: Low

· Interest/Demand: Medium

Rating Summary

There has been some hype behind the LeverJ project building up to the ICO. There is a clear opportunity for LeverJ to impact the decentralised trading space with its sophisticated trading platform offering traders the ability to leverage trades which is unique to the current space. The fundamentals (KVM) around the concept, the ability to develop the platform and use of technology is strong for this project. Ultimately, this will boil down to management (KVM) to deliver what they have set out and ensure successful adoption. For these reasons, the project bodes well for long term ROI investors when accounting for the fairly reasonable token allocation at current market prices/valuations.

However, the short-term ROI may not be rewarding considering the current market factors. Investors are largely reluctant to invest away Bitcoin due to its impending fork (Segwit2x) scheduled for 16th November. Coupled with the nog so favourable token metrics for those outside of presale whom qualified for a generous 35% bonus on top of the standard token allocation. Tokens are expected to be released a week after the end of the ICO which runs until 7th December 2017. However, market sentiment may change as a month in the Crypto space is a long term. Initially though, I believe the outlook is low short-term ROI with possibility of a change post Bitcoin fork. Further marketing maybe required for the project to have a chance of fully achieving its fundraising goal.

END

If you have reached the end then thank you for getting through this review. I will be posting further ICO reviews on projects that interest me for the time being.

These include:

Omega One

Blockstack

I will have a website launching soon with invaluable info on all things cryptocurrency and ICO’s.

You can follow me on twitter (@mycryptoworks) where I try to be regularly active.

Constructive feedback would be much appreciated.

Regards,

Mo @MyCryptoworks

This was an independant review and I received no incentives for my work from LeverJ or any any other associated parties involved in their ICO.